In a policy development that underscores the evolving role of digital assets within the U.S. financial sector, the Office of the Comptroller of the Currency (OCC) has reaffirmed that federally regulated banks can manage cryptocurrency on behalf of customers.
Banks may also outsource various crypto-related functions to third-party service providers, according to a letter issued by acting Comptroller of the Currency Rodney Hood on May 7, 2025.
This formal acknowledgment by one of the most influential U.S. banking regulators signals a turning point in how crypto is treated within traditional financial infrastructures. Institutions regulated by the OCC - including national banks and federal savings associations - are now clearly authorized to offer crypto custody, execute trades at customers’ direction, and collaborate with third-party custodians, all within the bounds of federal banking laws.
The move follows earlier clarifications in March 2025, when the OCC began relaxing its guidance around crypto-asset custody, stablecoin use, and participation in distributed ledger networks. Together, these statements suggest a broader policy shift toward integrating digital assets within the regulated banking system.
Custody, Trading, and Third-Party Partnerships: What’s Allowed Now?
The May 7 announcement is notable for both its scope and specificity. It clarifies that OCC-regulated banks may:
- Buy and sell cryptocurrencies held in custody on behalf of customers, when explicitly instructed.
- Provide supporting custody services, such as tax reporting and record keeping.
- Use sub-custodians or outsource crypto services to qualified third-party providers, provided they maintain robust risk management controls in accordance with third-party vendor oversight standards.
This marks a significant expansion of permissible activities. Previously, crypto engagement by banks was subject to murky regulatory interpretation, with fear of retroactive enforcement serving as a deterrent for many institutions. While a handful of OCC-supervised entities dabbled in digital asset custody over the last several years, most avoided deeper involvement due to legal uncertainty.
Under the new guidance, these banks now have clearer parameters for interacting with crypto, particularly in ways that support customer-directed activity. Importantly, it also opens the door for collaboration between regulated banks and crypto-native firms - such as custody providers and execution platforms - under formal risk-managed partnerships.
The OCC’s Broader Policy Reorientation on Crypto
The OCC’s evolving stance reflects a larger reassessment of the role digital assets will play in the U.S. banking ecosystem. After several years of regulatory fragmentation and inconsistent messaging across agencies, the OCC now appears to be aligning itself with the view that crypto is a component of modern financial services that requires integration, not avoidance.
Earlier in 2025, the OCC revised key pieces of its supervisory framework to allow greater flexibility for banks working with crypto. This included guidance on custody services, stablecoin facilitation, and participation in blockchain consensus mechanisms, including validator roles in distributed ledger networks.
Acting Comptroller Rodney Hood framed these changes not as experimental concessions, but as necessary steps to modernize financial supervision. In a video posted to social platform X, he stated, “More than 50 million Americans hold some form of cryptocurrency. This digitalization of financial services is not a trend; it is a transformation.”
The OCC’s recognition of the structural shift toward digital finance reflects growing market maturity, institutional interest, and consumer demand. It also coincides with political changes that have shifted the balance of regulatory attitudes in Washington.
A Regulatory Shift Under the Trump Administration
The OCC’s updated position must be understood within the broader context of the U.S. political climate. Since the return of Donald Trump to the presidency in January 2025, there has been a clear pivot in federal attitudes toward crypto policy.
In April, the U.S. Federal Reserve rescinded previous guidance that discouraged banks from engaging in crypto and stablecoin-related activities. Days later, President Trump signed a congressional resolution overturning a Biden-era rule that would have imposed strict tax reporting requirements on decentralized finance (DeFi) protocols. That rule, passed in 2021, would have classified many smart contracts and protocol operators as “brokers” under IRS regulations.
Together, these moves have fostered a regulatory environment more favorable to crypto innovation and experimentation within the banking sector. Industry observers interpret the OCC’s announcements as part of this broader deregulatory shift, designed to reconcile the reality of digital asset adoption with the structural integrity of the U.S. banking system.
Whether this approach yields long-term financial stability or new systemic risks remains an open question, but the immediate effect is clear: banks are now being encouraged - not dissuaded - to engage with crypto infrastructure under a well-defined supervisory perimeter.
Industry Reaction: Compliance Clarity and Market Confidence
The banking and crypto industries have largely welcomed the OCC’s latest guidance, seeing it as a foundation for long-overdue operational clarity. Katherine Kirkpatrick Bos, general counsel at ZK-rollup developer StarkWare, described the announcement as a shift from risk-avoidant policy to one centered on integration.
In her comments, Bos emphasized that allowing regulated banks to outsource crypto services “is a boon to regulated crypto-native service providers,” who often struggle to partner with traditional banks due to regulatory friction. She further argued that “more guidance will give further clarity and allow banks to re-enter crypto without the fear of existential regulatory risk.”
Crypto exchange Coinbase’s Chief Policy Officer, Faryar Shirzad, also voiced support. In a public statement, he praised Hood’s commitment to “regulatory clarity and supervisory best practices,” framing the OCC’s moves as both lawful and strategically aligned with emerging financial norms.
These endorsements reflect the industry's appetite for well-scoped regulation that neither overreaches nor stifles innovation. The biggest winners in this evolving framework may be banks and crypto-native firms willing to operate within the guardrails of traditional compliance infrastructure - AML/KYC, custody standards, and vendor risk controls - while embracing the advantages of decentralized technologies.
Implications for Banking Operations and Strategy
For banks, the opportunity to engage more directly with digital assets carries both strategic advantages and operational demands. Institutions looking to offer crypto custody or execution services will need to update their technological capabilities, risk management protocols, and customer disclosure frameworks.
Custody, in particular, involves complex responsibilities, including private key management, regulatory classification of assets, insurance coverage, and third-party sub-custodian arrangements. Banks that choose to outsource such functions must conduct due diligence, monitor service-level agreements, and align those partnerships with their own compliance architecture.
The OCC’s guidance reinforces the need for robust third-party risk management programs, which have become a central focus of supervisory reviews. These programs must not only assess cybersecurity and financial integrity, but also address vendor lock-in risks, contingency planning, and service continuity in the event of crypto market disruptions.
Banks must also grapple with a volatile and fast-evolving asset class. The provision of crypto custody services raises questions around asset classification, liquidity management, and fair-value accounting. Many institutions remain cautious, even as the policy environment shifts in their favor.
Still, the incentive to enter the market is growing. As demand for secure, regulated crypto custody rises among institutional investors and high-net-worth individuals, banks with existing trust infrastructure are well-positioned to fill that role - especially if they can leverage third-party platforms while retaining compliance control.
A Future of Converging Financial Systems
The OCC’s latest letters mark more than a simple expansion of permissible activities. They represent a convergence between traditional financial services and digital asset infrastructure that has been long anticipated but unevenly implemented.
With formal permission to custody and trade crypto assets on behalf of customers - and to outsource key activities to specialists - banks are now in a position to reshape the custodial landscape. This does not mean all institutions will rush into crypto, nor does it guarantee smooth adoption. But it does remove one of the key legal uncertainties that has held back innovation in the U.S. banking system.
At the same time, this regulatory shift reaffirms that crypto is not an external disruptor to the financial system but increasingly part of its architecture. Stablecoins, tokenized assets, and decentralized protocols may all eventually find themselves within the regulatory perimeter, governed not by exceptions but by integration.
For regulators, this shift will require a careful balance between encouraging innovation and managing risk. For banks, it opens new revenue opportunities in a highly competitive sector. And for crypto-native firms, it offers the promise of deeper interoperability with mainstream financial institutions - provided they are prepared to meet the standards expected of federally supervised entities.
As 2025 unfolds, the question is no longer whether banks can handle crypto. The question now is how - and how quickly - they will adapt to this new paradigm. The OCC has given them the green light. It’s up to the industry to decide how far it wants to go.